Social Buying can Increase Carwash Customer Acquisition

There is a lot of debate about how to make money with social media, much less its relevance to professional carwashing. The last I looked, Facebook had more than 400 million subscribers, with around 20 percent located in the United States. But in reality, social media is comprised of more than Facebook, Twitter and MySpace and includes a vast group of Web sites and businesses that allow people to connect online for a variety of useful, semi-useful and downright useless reasons.

Some of these include social bookmarking sites like delicious.com, meeting sites like Meetup.com, and social buying sites like Groupon.com, LivingSocial.com and Twongo.com. The path to revenue with most of these social sites is long, curving and uncertain, but social buying sites may prove to be an excellent revenue vehicle for carwash operators.

I recently tested all three of these social e-commerce sites with carwash promotions and had excellent results.

In a nutshell, social buying sites act like group purchasers for consumers. Sites call on businesses and encourage them to offer deep discounts to buyers. In return, the sites will feature participating businesses exclusively to their list (some community lists are more than 250,000 and growing) for one day and with zero upfront cost.

All the business owner has to provide is the deal and then deliver great carwash or detail services. The social buying site will build the consumer list, create the ad, run the online credit card processing, and so on. So, what’s the catch?

First, promotional offers need to be about 50 percent off the list price in order to get a business exposed to the site’s list of customers. Group buying clients have big expectations for enticing deals. Secondly, the sites take a huge cut of the net profit (half is standard). Thirdly, you have limited control over when the ads are run. Lastly, you also need to be mindful about balancing the promotional and new-customer acquisition value with the perception of devaluing your brand.

Discouraged? Let’s take a look at my positive experience and crunch the numbers.

I advertised on Groupon.com in April and was the only featured business that day. I offered my top $30 carwash for $15. Groupon blasted a nicely crafted e-mail featuring my carwash and our services along with some creative ad copy. They also included some Citysearch.com reviews (part of their value-add to customers is selecting “quality” businesses) to their list of more than 20,000 local subscribers. Participation cost me zero marketing dollars upfront.

By the end of the day, we sold 542 Groupons or what they call vouchers. My net revenue was half the Groupon value ($7.50) multiplied by the number sold (542), which equaled $4,065.

While the additional revenue was a nice bump to cash flow, the real hidden value was new customer acquisition at zero cost. With most marketing initiatives designed to acquire new customers, it is not unusual to go upside down on the first transaction. Typically, it’s going to cost you money to entice customers to your store. And, if you’re not very good at direct marketing strategies, it could cost you a lot.

Remember, there are only three ways to grow your carwash business: acquire new customers, get current customers to spend more money and get current customers to come in more often.

Most business owners wrongly focus most of their marketing efforts on acquiring new customers. This is misguided because customer acquisition is the most expensive and difficult way to grow your business. The cost of acquiring a new customer has been measured at eight to 20 times more than keeping a current customer relative to the profits each delivers.

All things considered, using social buying sites to market your carwash could prove to be one of the best, low-cost ways to acquire new customers. Here’s why:

In surveying the clients we attracted through social buying, at least 60 percent were completely new customers (never been in before) and another 20 percent to 30 percent were inactive (had not been in for a year or more). Using the Groupon example of 542 vouchers sold, that equals 325 brand new customers, 136 reactivated “lost” customers and 81 sales to current customers.

With the Groupon promotion, we brought in $7.50 per wash, which still covered all of my marginal costs, including utilities, chemicals and incremental labor. We actually made money on a lot of these customers after getting just a few pennies over breakeven for each one.

The other social buying sites we tried also have their perks and quirks.

LivingSocial is a Facebook application developer and seems to be savvier about integrating promotional discounts with Facebook fans. Applications like “Visual Bookshelf” and “Pick Your Five” attract social media consumers and drive group interaction and viral sharing.

LivingSocial also has a “share for a free deal” feature that is advantageous for both consumers and businesses. If a consumer purchases a deal and then entices three friends to buy the same deal, he or she then gets the